LONDON — European markets are expected to begin the week on a positive note, with most indexes pointing higher as investors monitor the latest developments in the escalating trade tensions between the United States and China.

According to early data from IG, Germany’s DAX is set to climb around 0.3%, France’s CAC 40 is expected to edge up 0.26%, and Italy’s FTSE MIB could advance 0.54%. The U.K.’s FTSE index, however, is projected to open just below the flatline.

This cautious optimism follows a difficult end to last week’s trading session. Global sentiment was shaken after U.S. President Donald Trump threatened to impose a new round of tariffs on Chinese goods in response to China’s recent export restrictions on rare earth minerals. The move, he said, would “financially counter” Beijing’s latest measures.

China currently dominates roughly 70% of the world’s rare earth mineral supply—essential materials used across high-tech industries, from electric vehicles and defense systems to semiconductor production. Given their strategic importance, any disruption in supply or pricing could have wide-reaching economic effects.

In a message posted Sunday on Truth Social, Trump appeared to tone down his earlier comments, suggesting that “trade relations with China will all be fine.” His remarks were seen as an attempt to calm market fears of an imminent escalation.

Meanwhile, China struck a defiant tone, declaring it was “not afraid” of a trade war. A spokesperson from the Ministry of Commerce criticized the U.S. for maintaining a “double standard,” referring to Trump’s previous announcement of an additional 100% tariff on Chinese imports.

Across Asia, markets ended lower overnight as traders reacted to the renewed tensions. However, U.S. stock futures ticked higher Sunday evening, showing early signs of recovery from Friday’s sharp decline. The rebound came after Trump’s latest comments hinted at a more measured approach to China policy.

The start of the week is relatively quiet on the data front, with no major economic reports or earnings releases scheduled for Monday. However, investors are preparing for a busy few days ahead, as major companies including ASML, LVMH, and Nestlé report their third-quarter results.

Beyond corporate earnings, global attention will also turn to Washington, where the International Monetary Fund and World Bank will hold their annual meetings this week. Market participants will be watching closely for updates on global economic growth forecasts, inflation trends, and any policy guidance from top financial leaders.

As the week unfolds, traders will likely remain cautious but hopeful, balancing the optimism of a stable U.S.-China dialogue with the uncertainty surrounding the next chapter of global trade relations.